Dan Cravens – Director IR Doug Parker – CEO Derek Kerr – EVP & CFO Scott Kirby – President Robert Isom – COO

Jamie Baker – JPMorgan Mike Linenberg – Bank of America William Greene – Morgan Stanley Gary Chase – Barclays Capital Helane Becker - Jesup & Lamont Dan McKenzie – Next Generation Equity Research Kevin Crissey – UBS Unidentifiable Media Representative Dawn Gilbertson – Arizona Republic Ted Reed – TheStreet.com

Welcome to the US Airways third quarter 2009 earnings conference call. At this time for opening remarks and introductions, I would like to turn the call over to Dan Cravens, Director of Investor Relations. Please go ahead.

Good morning everybody, and thanks for joining us today for our third quarter 2009 earnings conference call. With us in the room today is Doug Parker, our Chairman and CEO; Scott Kirby, our President; Robert Isom, our Chief Operating Officer; Derek Kerr, our Chief Financial Officer; Steve Johnson, our Executive Vice President of Corporate; and Elise Eberwein, our Executive Vice President of People and Communications. As we usually do, we’re going to start with Doug. He will provide some general comments on our third quarter financial results and provide an industry overview. Derek will then walk us through the details on the quarter, including our cost structure and liquidity. Scott will then follow with some commentary on the revenue environment and our operational performance during the quarter. Then after we hear from those comments, we will open the call for analyst questions and lastly questions from the media. Before we begin, we must state that today’s call contains forward-looking statements, including statements concerning future revenues and fuel prices. These statements represent our predictions and expectations as to future events, but numerous risk and uncertainties could cause actual results to differ materially from those projected. Information about some of these risks and uncertainties can be found in our earnings press release issued this morning, our Form 10-Q for the quarter ended September 30, 2009 which was issued today as well and our 2008 Form-10K. In addition, we will be discussing certain non-GAAP financial measures this morning, such as net loss and CASM, excluding unusual items. A reconciliation of these numbers to the GAAP financial measures is included in the earnings release and that can also be found on our website at www.usairways.com under the Investor Relations tab. A webcast of this call is also available on our website and will be archived for one month. The information that we are giving you on the call is as of today’s date and we undertake no obligation to update the information subsequently. At this point, I’m going to turn the call over to Doug for his opening remarks. Thanks again for joining us.

Thanks Dan and thanks everybody for being on. As you now know we reported our third quarter results earlier today. Net loss of $80 million which compares favorably to last year’s $866 million loss. The excluded special items, net loss of $110 million again comparing favorably to last year’s loss of $243 million including special items. We actually think the best way to look at the year-over-year earnings is in addition to excluding special items adjust for fuel hedging. Last year there were large gains related to fuel hedging. This year there are some modest losses as Derek will talk about. As you adjust for those what you see is in this quarter we lost $60 million. Last year had a loss of $311 million on the same basis. That is over $250 million of year-over-year improvement. The drivers of that improvement are a number. First and foremost our team is doing a fantastic job of running the airline which we are extremely grateful for. We are number one on a year-to-date basis amongst the major air carriers in on-time performance. We are actually number two now amongst the major carriers in baggage performance which was a phenomenal turnaround. Robert Isom and all of our employees are doing a great job of running a very good airline. It is being noticed by our customers. We are also keeping our costs down. One of the nice things about running a good airline is your costs actually go down and we are seeing that despite the fact that our capacity is down about 3.5%. Our unit costs ex fuel declined by about 3/10 of 1%. On a year-to-date basis they are down almost a full percentage point on a 5.5% decline in capacity. Lastly, another driver is the year-over-year increase in ala carte revenues. The initiatives we in the industry have put in place to increase ala carte revenues are having a significant impact on our financial performance. We had over $100 million in revenue in the third quarter alone. We expect on an annualized basis now these revenues will generate about $500 million in additional profit for the company on a year-over-year basis. On top of all that we also have maintained a strong liquidity profile. Derek will walk through all this but we ended the quarter with $2 billion in total cash, $1.5 billion unrestricted. In summary, we are never happy with reporting a loss certainly not in the third quarter which is one of the stronger quarters for the industry but we are extremely happy with the way our team is managing through this difficult time. Scott will talk about the encouraging revenue trends that we are starting to see. Again, given what our team is doing, industry leading operations, performance, diligent cost control, meaningful ala carte revenue generation, as we look out into an improving demand environment we believe we are in an excellent position to capitalize on the recovery. With that I will turn it over to Derek who will take you through the details of the financials and Scott will give you some details on the revenue front. Then we will take questions.

Thanks Doug. Good morning everybody. We filed our third quarter 10-Q this morning and in that Q we did report a net loss of $80 million or $0.60 loss per diluted share. This compares as Doug said to a net loss of $866 or $8.46 loss per share a year ago. When you exclude the net special items the company’s net loss for the third quarter was $110 million or a loss of $0.83 per diluted share versus a net loss excluding special items of $243 million or $2.30 per share in the third quarter of last year. During the third quarter we did recognize special items that totaled a credit of $30 million. The special items included $48 million of unrealized net gains associated with the company’s fuel hedge contracts. In addition the company recorded $10 million of charges related to the aircraft costs as a result of previously announced capacity reductions and $5 million in severance and other charges. We did also record a non-cash charge totaling $3 million to record an other than temporary impairment for the company’s investment in auction rate securities. I have excluded these special items from the remainder of this discussion to better reflect our financial performance on an ongoing basis. The effect of fuel hedging significantly impacted the company’s financial results. Adjusting for fuel in the third quarter of 2009 the company reported a realized fuel hedging loss of $50 million while in the third quarter of 2008 the company reported a fuel hedge gain of $68 million. If you exclude special items and net realized losses and gains on fuel hedge transactions the company reported operating income of $23 million and a net loss of $60 million for its 2009 third quarter. This represents an improvement of $284 million and $251 million respectively versus the third quarter 2008 operating loss of $261 million and a net loss of $211 million as measured on the same basis. For the third quarter total capacity was 22.5 billion ASM’s, down 3.6% from 2008. Our mainline capacity for the third quarter was 18.7 billion ASM’s down 3.5% from a year ago. Express capacity was 30.8 billion ASM’s, down 4% from 2008. For 2009 mainline ASMs are projected to be 70.7 billion this year which is down approximately 5% versus 2008. For the fourth quarter mainline ASM’s are projected to be 16.7 which is 1.8% down from the 2008 levels. We are still completing our 2010 planning process so formal ASM guidance for 2010 will come later but at these high fuel levels and the possibility they will go higher it is hard for us to rationalize any capacity growth. Domestically we expect to be down 2-3%. On the international front despite the fact we have had significant growth this year and will be overlapping that next year we expect to reduce transatlantic capacity. So our international growth will be resumption of Mexico service reduced due to H1N1 and our new service to Rio de Janiero. During the quarter we announced we entered into an agreement with Republic Airways to sell ten Embraer 190 aircraft. Five aircraft have been sold and two delivered to Republic. The remaining three we are currently leasing from Republic. The remaining five will be sold later this month and will be subject to lease back for a period of up to seven months. The transaction will reduce debt by $217 million also under the terms of the agreement the full amount outstanding under our $35 million Republic loan will be repaid out of the proceeds from the purchase of the aircraft. This reduction in Embraer 190 fleet impacts ASM’s in 2010 by about 1%. We are still assessing options and considering future reductions due to the sale of our remaining fleet of 15 Embraer 190 aircraft. We also continue to optimize our network. In August we announced a transaction with Delta airlines that will allow US Airways to expand service at Ronald Reagan Washington National Airport and enter key business centers in Brazil and Japan. The transaction is subject to regulatory approval. The company anticipates that the successful completion of this transaction will improve profitability by more than $75 million annually. The economic environment continued to adversely impact our revenues in the third quarter. Scott will go into more detail during his comments. Total operating revenues for the quarter were $2.7 billion down 16.6% from the same period in 2008 on a 3.6% decline in total ASM’s. Total revenue per available seat mile was $0.1208 down 13.5% versus same period last year. Cargo revenues also continue to be impacted by the economy. They decreased 36.5% in the quarter to $23 million. During the quarter our operating revenues were up 8% versus 2008. Our other operating revenues including our successful ala carte pricing model which is now projected to generate approximately $400 million in revenue for the full year 2009. Mainline passenger revenues were $1.76 billion down 20.0. Mainline passenger revenue per available seat mile in the third quarter was $0.0939 down 0.1% versus the same period last year driven by a 17.2% decrease in yields offset in part by record load [effector] for the third quarter of 84%. The airline’s operating expenses for the third quarter were $2.7 billion down 31.3% as compared to a year ago due primarily to a 51% decrease in mainline express fuel expenses. Mainline costs per ASM was $0.11 down 31.3% period year-over-year on a 3.5% decrease in mainline capacity. Our employees continue to do an outstanding job of running a great airline. Due to their significant efforts the company has made dramatic improvements in all DOT metrics. As a result of that accomplishment our employees earned $4.5 million in bonuses for July and August DOT performance. Running an efficient and on time airline has also enabled us to reduce costs despite our 3.5% capacity reduction during the quarter. Aggressive cost management by our entire team contributed to our cost reductions. Excluding fuel, special items and realized losses and gains on fuel hedging instruments our mainline cost for ASM was $0.0806 in the quarter, a decrease of 0.3% versus 2008. Express operating costs per ASM ex fuel was $0.1276 for the quarter up only 1.7% versus 2008 on a 4% decrease in ASM’s. Our average mainline fuel price including taxes and realized losses and gains on fuel hedging instruments for the third quarter 2009 was $2.07 per gallon versus $3.50 per gallon in the third quarter of 2008. For the third quarter we had 11% of our total fuel consumption hedged. In the quarter we settled a hedge transaction which resulted in a realized loss of $50 million or $0.18 per gallon. During the quarter our last hedge position expired and we have no collateral held by hedge counterparties given the continued volatility in fuel prices we have elected not to execute any additional hedges at this time. For the full year we are forecasting fuel price in a range of $2.10 to $2.15 based on the October 19 forward curve. Our forecast for the fourth quarter is $2.08 to $2.13. Using the same forward fuel curve our estimate for the 2010 fuel price is in the $2.35 range. Our CASM ex fuel guidance for the fourth quarter of 2009 is unchanged with mainline up 3-5%. We are still forecasting full year mainline CASM ex fuel to be up zero to 2% versus 2008. Express CASM is forecasted to be up 4-6% in the fourth quarter. As I mentioned earlier in the call we are still in the middle of our budgeting process for 2010 and we will have estimates for next year’s unit costs on our next call. We ended the quarter with $2 billion of total cash and investments of which $1.5 billion was unrestricted. Total cash includes $227 million of auction rate securities at fair value that currently are reflected as non-current assets on our balance sheet. Despite the challenging capital markets we successful raised approximately $137 million in net proceeds during the quarter through an underwritten offering of common stock. In addition, the company closed on aircraft financing of approximately $265 million and secured a financing commitment for the December A330 delivery. We now have committed financing in place for all replacement aircraft that will be delivered in the 2009 fourth quarter. Looking at CapEx we have reduced our non-aircraft 2009 annual spend to $140 million, a reduction of $10 million since the last quarter. Excluding the Embraer 190 sales we are forecasting total CapEx to be $340 million in 2009. This includes net aircraft CapEx of $192 million. In summary, in response to the challenging economic environment we have worked extremely hard to optimize our network, improve our liquidity and aggressively manage our costs. These efforts have paid off and have better positioned us for long-term success. With that I will turn it over to Scott.

Thanks Derek. I will take a minute to talk briefly about our operational results and then turn to the revenue environment. We are extremely proud of our team which continues to do a superb job operationally and we are once again the number one on-time airline year-to-date amongst the network carriers. We are also continuing to see significantly improvement in all of our other operational metrics like mishandled bags, complaints, etc. You not only see that in the operational metrics but part of our impressive cost control is related to running better operations. Turning to the revenue environment. During the third quarter consolidated passenger RASM was down 15% while total RASM was down 13.5%. The passenger RASM decline was less severe than second quarter declines and was consistent with the improving demand picture we experienced during the third quarter. For some regional color, domestic total RASM continued to outperform international with domestic tracking down 9% while international was down over 25%. This is obviously reflective of the larger domestic capacity cuts and the impact of ancillary revenues on the domestic [route] network. This trend is continuing into the fourth quarter. With that I will talk about the revenue outlook going forward. I have seen some of the commentary on other calls and I would characterize our view as slightly more bullish while perhaps equally bullish but willing to be a little less cautious about that outlook. As we move through the quarter and into the heavier business booking period in September we continued to see an improvement in the revenue environment with three factors driving the increase. One, improving business demand. I will give you some facts to help corroborate that conclusion shortly. Two, improved pricing environment and three we are entering a period where the year-over-year comps get easier. To be clear, we are also seeing core sequential revenue improvement that is independent of the easier comps. On the business travel front our historical metrics of full fare traffic as a way to measure business demand have grown increasingly irrelevant as there are more and more junk fares in the market with few restrictions that business travelers can now use as an alternative to full fares. However, we do have some good anecdotal data that we believe is indicative of business demand. First, the shuttle is largely business traffic and on the shuttle we expect our RASM to be down only 5% in October which is a significant improvement from down 25% in the second quarter and down 16% in the third quarter. Similarly, our corporate contracted revenue was down 31%, 32% and 17% in the first three quarters of the year respectively. That third quarter improvement has accelerated in October and we expect October corporate revenue to be down about 7%. While these statistics alone don’t prove that demand is recovering or that it will stay recovered, there is strong evidence that it is indeed recovering. Similarly, the pricing environment continues to improve. While it is hard to sort through what is happening with the thousands of fares out there one easy metric we look at is the book yield. In the second quarter our book yield for all tickets booked regardless of when that travel was scheduled was down 20%. In the third quarter this metric improved to be down 13% and month-to-date October it is down only 8%. Importantly we are seeing the most year-over-year strength in close-in yield. Putting all that together we currently expect October to RASM to decline 10-11% compared to a 15% decline in September. Due to adjustments for the Thanksgiving shift, both November and December booked yield and RASM are well ahead of where October was at the same point in time so our current expectation is both the November and December year-over-year RASM comparisons will be several points better than we experienced in October. In summary, the employees of US Airways continue to run a truly fantastic operation and we finally believe we are seeing definitive signs of improvement in the revenue environment. Now I will turn it back to Doug.

Operator, we are ready for questions.

(Operator Instructions) The first question comes from the line of Jamie Baker – JPMorgan. Jamie Baker – JPMorgan: I was thanking Scott for providing an uncharacteristic level of detail on RASM. I do want to circle back on that topic. I am just trying to reconcile your RASM performance domestically with that of Southwest whose RASM has turned positive year-over-year in September and October. I realize we are discussing US Airways here but given all the domestic overlap with Southwest I am tempted to believe you might be sacrificing RASM to them with your bag policies. Any thoughts on this?

Sure. One, I think Southwest did have a fantastic result in September and a huge credit to them. One, I think they are doing a better job at revenue management in the last couple of years than they historically did and you are starting to see that in their results. I think September was more of an outlier and if you adjust for capacity that explains most of Southwest’s acceleration in September versus the rest of the industry. Last year’s September for them was weak relative to the industry. This year they have a much better capacity comparison with Southwest moving down about 8% in September and last year they were up. The rest of us had our capacity cut in the prior year. I think if you go look at it on a 2-year basis or look at it adjusted for the sequential change in capacity it is still a good result but a much closer result in terms of what is happening at Southwest versus us or any other airline.

The next question comes from the line of Mike Linenberg – Bank of America. Mike Linenberg – Bank of America: On the E190, the $35 million loan from Republic, I saw the press release, I don’t recall seeing the entire consideration. Can you provide that or is that confidential?

The entire consideration for the deal? Mike Linenberg – Bank of America: For the 190’s.

Taking out $218 million debt and the entire consideration above the 35 was about $3 million more so there was $3 million in cash to us and then the 35 on a loan that was due in 2010 and 2011. Then they take over the aircraft and all of the debt on the aircraft.

The next question comes from the line of William Greene – Morgan Stanley. William Greene – Morgan Stanley: I just wanted to ask a little bit about the revenue commentary you made and the context of what is going on with fuel. If we put it all together with the hedges and everything and you sort of look at the fourth quarter are we net/net positive for this revenue change you have outlined versus the fuel price change?

Positive compared to what I suppose would be the question and compared to what your expectation was. Certainly though what I would say is one there is a correlation. We have some natural hedge to fuel price with the demand environment improving. Two, while it probably isn’t true in the very, very short term in other words the fourth quarter I think the industry has indicated in the last couple of years the ability to respond pretty quickly to increases in fuel prices either with less capacity and/or a better improvement in the pricing environment; ratings, fare, surcharges, etc. and things like that. As we are now seeing the demand environment improve I think that goes well for our ability as an industry if fuel prices keep going up to get the pricing improved. That would have been harder earlier in the year when we had a weaker demand environment but coming into a strong demand environment I think the industry could do that going forward. William Greene – Morgan Stanley: Is it safe to say we are in a strong demand environment or just improving?

I think we are in a quickly improving environment which would be indicative of a V-shaped recovery I suppose on the economy but I think we are in a quickly improving demand environment that I would characterize as strong demand that could lead to rapid fare increases. These things spiral up and spiral down quickly as we have seen recently and it feels to me we are certainly the odds are in favor of a quick spiral up as opposed to something more anemic.

On the fuel point obviously we are all concerned about increasing oil prices. I would note in support of Scott’s comments, versus the last time we saw rapidly increasing fuel prices, a year or so ago we are all, the entire industry is in a similar position as to what we are paying for fuel which is in marked contrast to a year ago when we had one competitor, Southwest, who had a large hedge position and wasn’t paying the same amount the rest of us were. I think that had a material impact on the industry’s ability to increase prices. As fuel prices went up the increase varied. We are not in that situation again so if indeed oil prices stay where they are, which we certainly don’t know is the case. I do believe the industry will be in a much better position to pass that increase cost along through fare increases. William Greene – Morgan Stanley: Given what has happened with fuel in the last three weeks are you layering in more hedges now?

We haven’t. Again, we have chosen not to largely because of what we experienced the last time around which what we found is we do have a natural hedge in place which is the economy and our revenue stream. What we have found in the past is if we go and put in place hedges and indeed the environment gets worse you have actually increased the risk to the firm, not decreased it. You end up in a situation where oil prices are falling only because demand is getting worse and your revenues fall and worse yet you have to prepay for it because you put derivatives in place that you need to fund. We think the right way to actually decrease the risk to the firm is to not be hedged at this time.

The next question comes from the line of Gary Chase – Barclays Capital. Gary Chase – Barclays Capital: I wanted to just follow-up on that last one for a second. With fuel this volatile isn’t one of the things that comes out of it don’t we need to be much more able to respond operationally? I mean jet fuel is up $0.25 in the span of a few weeks. You know the industry has been good and responding. I don’t think there is any question about that at this stage but are we structured to deal with this kind of volatility and are there any changes that can reasonably be implemented in the near-term that will help you deal with that? Are you sure the energy isn’t going to change any time soon?

I hope it will or accept the premise it is going to be volatile. I would like to see that change actually. I think the volatility is driven by speculation that it is a severe hindrance to our economy recovery in general, not just the airline industry. That is something we are working hard to encourage our leaders in Washington to correct and to at least put some transparency on the speculation that is occurring and put limits in place, etc. We are hopeful that will get done. I do believe that will have a material impact on the volatility but it is not done yet. Like I said we will accept the prices are going to remain volatile. To your question on what can we do about that and how can the industry respond, certainly I think the industry has shown in the past the ability and willingness to reduce capacity as costs increase. I know that exists and will continue to exist. The bigger impact I do believe is going to be the ability through pricing. I can’t stress enough again the difference between the last time we saw fuel prices go up and fares didn’t go up in large part because of the fact that not everyone in the industry was seeing their fuel price go up. That is different this time. The demand environment is, as Scott described, the supply and demand environment is getting closer to equilibrium and I think if you do see oil prices stay at these levels you should adjust your revenue forecast accordingly. Gary Chase – Barclays Capital: When you gave the guidance was that total RASM or passenger RASM and does it matter anymore? Are we kind of lapping enough of these fees where there is not going to be a real distinction between the two?

It was passenger RASM and it is starting to matter less. I think for the next couple of quarters there will still be about a point gap between passenger RASM and total RASM. Total RASM will be about a point better than passenger. Gary Chase – Barclays Capital: On the business trends, is there any color you can provide on domestic versus international? Are you seeing a material difference in the way those two different businesses are recovering?

I think certainly domestic business travel is recovering more quickly than international. That is not just true for business it is true for leisure as well. As we go through the winter business is even more important for the international. As I said in my remarks, at least as far out as we can see international continues to look significantly weaker than domestic, particularly transatlantic. I think that recovery so far is certainly stronger domestically than it is across the Atlantic which is really the only data that we have. Gary Chase – Barclays Capital: On the $75 million from the facility swap, etc. with Delta how are you thinking that is going to play through the P&L? Is that predominately incremental revenue?

There will be cost reductions and also I think an improvement for RASM though I would have to adjust for length and such. It will probably mostly come in terms of cost reduction because we will get rid of small gauge airplanes that are high CASM and relatively high RASM replacing them with one, capacity but two, the replacement capacity will be larger, higher gauge airplanes. So it will probably mostly show up on the cost side.

The next question comes from the line of Helane Becker - Jesup & Lamont. Helane Becker - Jesup & Lamont: If you look at the decline in revenue year-to-date and the decline in fuel costs year-to-date it is a fairly close match with the difference really being the improvement in your margin. Are you saying we should think about dollar for dollar going forward? If oil prices stay here we kind of just adjust revenue up in that way?

I can’t tell you how to forecast but all I am trying to suggest is they are indeed linked and there is a link. If you project higher fuel prices in 2010, I wouldn’t, if I was building models I would have some increase in revenues. Clearly where our costs are will impact where pricing goes. I know in the past you have seen cases where that hasn’t happened but this is a case that I think that is different than the past again, a material difference in that we are all actually seeing the same decrease. Two, the supply and demand environment while not perfect is certainly much closer to equilibrium than it has been over the last year so the industry should have the ability to do that. You have to figure it out yourself how you want to model that. All I am suggesting is if you have a certain view on [inaudible] for next year that view should change as your fuel forecast changes. Helane Becker - Jesup & Lamont: Then you are assuming there is no sensitivity to demand?

What I am saying is supply and demand is closer to equilibrium and as costs go up as you see in real businesses you need to adjust your pricing to cover the cost. Like I said it hasn’t always been the case but in this situation I think that will be the case. Helane Becker - Jesup & Lamont: Just in terms of the LaGuardia/Washington shift do you have a date when you think that can occur? Maybe you said it and I missed it.

We don’t have a date yet. It is subject to regulatory approval which we are hopeful that we will get soon. We have a second request at the Department of Justice and we expect to be able to certify substantial compliance shortly. We are hopeful we think this is a transaction that certainly is consistent with the antitrust laws and all the DOT regulations so we are hopeful we will get that approved quickly. It is subject to regulatory approval and we are not certain of that timeframe.

The next question comes from the line of Dan McKenzie – Next Generation Equity Research. Dan McKenzie – Next Generation Equity Research: As I understand it the Barclays credit card agreement with respect to the advanced sale of miles is tied to an unrestricted liquidity covenant of $1.5 billion. It looks like September 30th liquidity was at about $1.47 billion so I guess I am wondering does that mean Barclays is no longer replenishing their advance sale of miles? I guess related to this how should investors think about that looking ahead? Perhaps even better some of your peers will provide a year-end liquidity target. I am wondering if you would be willing to do the same?

First, I don’t know if you saw but Barclay’s amended the condition precedent to $1.35 billion for three months and what I would say is Barclay’s has been a great partner all year. This is the second time they amended that covenant or that condition. That condition is well above our real restriction which is the $850 million unrestricted cash covenant. They have been a good partner and have amended that on two occasions. We are currently in compliance and they are continuing to fund. As we go through the rest of the year if we needed to amend that again particularly as we look out into an environment that is improving compared to earlier in the year when they were willing to amend the covenant even in an deteriorating environment. We would have discussions with them and I would hope we would get the same thing. That is only if we need an amendment to the condition precedent. Regardless of that the main point I would say is even if they didn’t that is a $16 million a month issue and based on our own forecast we certainly are given the revenue environment outlook that we have today we feel pretty confident we are going to be back above the $1.5 billion in a few months regardless. So one I would say Barclay’s has been a good partner and we would expect them to work with us as they have demonstrated their willingness to in the past if we need it. Two, it is not a material cash impact even as we get through the last few winter months.

As to year-end cash we don’t as part of our guidance, as I think you know, give cash forecasts going forward. Largely because that is a number that can just be volatile because it is at point in time. Nonetheless what I am happy to tell you because we have had these questions in the past I am happy to report yet again where we are now which is $1.5 billion of unrestricted. I am happy to point out that the point of which investors need to be concerned is the $850 million of unrestricted cash covenant we have in place as part of our debt agreement that we are well above and you do your own forecast as to what you think might happen in the fourth quarter and through the winter. I think you would be extremely hard pressed to get this company anywhere near $850 million unrestricted cash or anything close to it. We certainly don’t project ourselves being anywhere near it so we feel quite good about our current liquidity position and our ability to go through the winter. I don’t believe that is an issue whatsoever. Dan McKenzie – Next Generation Equity Research: Given the commentary about reduced transatlantic flying next year are there any preliminary thoughts at this point about whether that would be utilization, potential sale of aircraft or repositioning of aircraft?

Essentially what will happen is the aircraft will come out of the Atlantic and fly domestically which leads to a re-gauging of our entire domestic operation. Essentially when you get right down to it the Embraer 190’s are going to fund some of the reduction in Atlantic flying where a 757 comes off the Atlantic and replaces an A321 which runs down to replace a A320. You kind of follow through that whole chain of events where getting rid of physical aircraft is really what is funding the reduction across the Atlantic. Dan McKenzie – Next Generation Equity Research: Is it possible or do you track the connecting market share that you are getting at Philadelphia relative to nearby substitute airports? I guess I am wondering if you are flying more international out of Philadelphia are you seeing some of the connect traffic that was going through previously now going through Philadelphia?

I’m not sure we track them exactly the way you describe but certainly we are carrying more connecting traffic that went through other East Coast hubs to go to Europe as we have increased our European flying. That is certainly true.

The next question comes from the line of Kevin Crissey – UBS. Kevin Crissey – UBS: Can you give an update on labor?

No you didn’t miss it. The situation on labor is much unchanged as it has been for the last couple of years now. That is we have contracts in place with the vast majority of our employees; our mechanics, our fleet service agents, our gate agents, all working under one combined contract and integrated nicely. We have two exceptions to that, our pilot contract and our flight attendant contract which we haven’t gotten to one joint contract yet. Negotiations continue on both of those contracts. They have definitely been impacted by a seniority dispute with our pilots. That dispute continues. You guys know it all so I won’t spend a lot of time on it unless you want to follow-up with a question. That seniority integration issue which has been the subject of litigation between our two pilot groups and now is subject to an appeal of that litigation continues and as it continues it makes it extremely difficult in my imagination to get one contract. While negotiations continue it is clearly impacted by our internal pilot dispute. Until that is resolved I would imagine we won’t get to a combined contract. That unfortunately had an impact on our flight attendant contract as well. Flight attendant and pilots obviously work together. The work rules are similar, not the same, but certainly linked in some cases. On the US Airways, the ex US Airways contract side, the pilots and flight attendants the crews stay together. So the fact we haven’t been able to get through the pilot contract has had an impact on the flight attendant contract which we are trying to break that linkage and get something done with our flight attendants. We have had some encouraging progress of late. We are not there yet. The flight attendant contracts talk continue. The pilot contract talks continue but again I don’t want [considering it done] until we get this seniority issue resolved. Kevin Crissey – UBS: So business as usual with that for at least versus what you have been doing?

Yes, what I just described is the situation we have been in since the merger in 2005. Note again what a great job our team is doing on taking care of our customers while that goes on.

At this time we would like to take questions from the media. (Operator Instructions) The next question comes from the line of Unidentifiable Media Representative.

I wanted to clarify on the cash situation I thought I heard Derek say that they hope to get back above 1.5 in the next few months but then I thought I heard Doug say they are at 1.5. So could you help me understand that?

I think that was Scott but we are at 1.47 where we ended the quarter at so the question was about a 1.5 number and our Barclay’s covenant is at 1.5 and Scott just alluded to the fact that over time we believe we will be back above that 1.5.

We didn’t give a forecast. All we said was we ended the quarter at $1.5 billion of unrestricted cash.

As I understood it from the 10-Q the agreement with Barclays to reduce it to 1.35 runs through this month. Do you expect to need a similar reduction then starting in November which is just a couple of weeks away or do you think it will already be back at the 1.5 and not need an extension of that 1.35 agreement?

As I said in my earlier comments if, and we are not giving a forecast on the “if,” but if we need it Barclays has worked with us twice already this year to give us those modifications to the precedent and we would expect they would do it again or hope that they would do it again consistent with historical patterns. Secondly, I also pointed out that even if they didn’t we are almost through the winter which is the low cash period and that is my point about the $1.5 billion. We expect to be back above $1.5 billion in any event shortly. That is where we are with Barclays.

Just to be clear, the point we are trying to make here is we disclose all this because it has an impact on what our cash may or may not be, it is not a material impact on our relative cash balances. If indeed, as Scott said, we weren’t able to work something out with Barclays which we expect we would, if indeed we didn’t the impact is nothing other than the fact that a $16 million payment to Barclays wouldn’t be made in those months. So we don’t view it as…it is a disclosible event but not a material event.

On ancillary revenue I think the wording was you expect it to run about $500 million this year. Do you expect it to hit $500 million this year or do you think this is more of a starting next year kind of number?

That is starting next year.

Are you able to share a number for this year?

Just over $400 million for this year.

The next question comes from the line of Dawn Gilbertson – Arizona Republic. Dawn Gilbertson – Arizona Republic: We have talked before about Southwest baggage and you have been pretty adamant you are saying no loss of market share. No noticeable impact from their increasing aggressive campaign on bags fly free. They have been making a lot of noise in the last week that they are starting to see an impact and they are definitely stealing share. Has your position changed on that?

It hasn’t. We don’t see any share shift. We don’t see the share shift. I have said in the past it is possible that where we are today with basically all airlines except Southwest having a baggage fee is a stable equilibrium where we each lose a very small amount of share, so small we can’t measure it but because Southwest is the only one gaining a whole bunch of different small shares from the airlines it becomes enough that they can see it in numbers. I think those two things can be consistent statements actually. Dawn Gilbertson – Arizona Republic: Also on the ancillary revenue front are you looking at other fees? Where do you stand on that right now? Are you happy with where you are at? You increased the baggage fees and I know that is bringing in more money. What can we expect in the next year on that front from you?

We are always thinking about new ideas. We don’t have anything new to announce right now. I think I have said on conference calls in the past I think the next big area for ancillary revenue is allowing customers at any point in the booking process to pay some fee to sit in a better seat. The reality is sitting in the first row of coach on the aisle is a better seat than the middle seat next to the lavatory in the back of the airplane and today we charge exactly the same price for those. So to allow customers to differentiate between those two seats is something we are eventually going to do I believe. It is remarkably very challenging technologically to get that done but we are working on that. That is going to figure somewhere in the future. Dawn Gilbertson – Arizona Republic: How far in the future would you say? More than a year?

We may be able to do some of that next year sometime in the middle of the year. Dawn Gilbertson – Arizona Republic: Versus you mean just being able to do it 24 hours in advance?

Correct. Today you can only do it 24 hours in advance. Dawn Gilbertson – Arizona Republic: Can you give an update on Wi-Fi?

In what way? Dawn Gilbertson – Arizona Republic: What your plans are there.

We are installing Go-Go air product on our A321’s. That begins the beginning of next year and all of our A321’s which are our principal long haul aircraft will have Wi-Fi onboard. Dawn Gilbertson – Arizona Republic: Do you have a price yet?

A price to the customers? Dawn Gilbertson – Arizona Republic: Yes.

I don’t think we have announced that though it will probably be the same as what Go-Go is charging with other airlines. Dawn Gilbertson – Arizona Republic: Robert, do you have any update on the FAA penalty? Have you responded yet and when you might see that resolved?

No updates. Dawn Gilbertson – Arizona Republic: The NPR report this week on El Salvador have gotten quite a lot of publicity. I haven’t seen you comment on that. Do you have any comment?

We really haven’t commented on it. We think the story was without merit and we are very proud of the maintenance operation we run and are very pleased with the vendors we have within the United States and outside and our own employees. We can guarantee you that the maintenance we do whether it is in-house, within the United States or outside, it is held to the same standard inside or outside. Also audited not only by us but also by the FAA in the same way.

Robert and his team have just done a fantastic job. You see it in the operating numbers but we also see it internally with all of our reliability numbers and we have established a great working relationship with the FAA and they are doing their job of making sure that the aviation industry is safe and we like working with them. Our team and the FAA work extremely well together and we expect the will continue to.

The next question comes from the line of Ted Reed – TheStreet.com. Ted Reed – TheStreet.com: As a general question, you are the last guys to report. It seems like most carriers beat estimates and the outlook from most carriers is good. Is it fair to say the airline industry has kind of survived an economic crisis following a fuel crisis and the industry is out of the woods now?

I don’t know anyone is going to try and characterize it as being out of the woods. I will say what I said last time which is I think all of us have done what we needed to do to get through this very difficult time. You have seen a lot of liquidity raises. The airlines that made it through this one I think you are not going to see any additional casualties for lack of a better word. I think those of us who are around have made it through a very difficult time. It is not over is probably the best way to say it. This is still…what has to happen is we have to get this industry back to profitability. The standard can’t just be survival. We passed that standard but there is a higher standard out there which is getting actual returns for investors on their investment. That standard we have not gotten to and have a long way to go yet to get there. If all you care about is survivability I don’t think that is an issue. Clearly for the airlines flying around today certainly for the near-term, but over time we have got to get this industry back to sustained profitability and we are not close to that standard. Ted Reed – TheStreet.com: My second question is about the Caribbean. I was on the Air Tran call and they are expanding in the Caribbean from Atlanta and you have a Caribbean hub in Charlotte, or did, but is the Caribbean becoming an area just for low cost carriers like Jet Blue and Air Tran and is it increasingly hard to make money there or are you able to do well there for the outlook for this winter?

We do quite well there and one of the things US Airways did several years ago was significantly increase its presence in the Caribbean and we are a very large carrier to the Caribbean. It is one of the better parts of our network. It has been particularly been helpful this year as Mexico got weak with everything that happened in Mexico. It does well and I think it will always be a big part of our network. Ted Reed – TheStreet.com: So no problem competing with the continued expansion by these low cost people?

No.

There are no further questions at this time. Mr. Parker I would like to turn the conference back over to you for any additional or closing remarks.

Thank you very much. We have no additional closing remarks. If you have any questions please contact Dan Cravens or our Corporate Communications staff. We would be happy to get back to you. Thanks for your time.

This concludes today’s conference. Thank you for your participation